Serbia’s economy ministry said it has failed to reach an agreement with a consortium of UK-based Frontier Pharma Limited and Russian LLC NPA Petrovax Pharm on the sale of 25% of majority state-owned drug maker Galenika.
The government plans to abandon the model for privatisation of Galenika through subscription of a capital hike by a strategic investor and find another model, the economy ministry said in a statement on Wednesday.
The ministry added that the government has already discussed the restructuring of Galenika’s outstanding debt with the company’s management.
The sale failed because the consortium had been unable to strike a deal on Galenika’s 70 million euro ($75 million) debt with five bank creditors, public broadcaster Radio Televizija Srbije (RTS) quoted trade union Nezavisnost representative Zoran Pantelic as saying on Wednesday. The consortium was ready to assume one-fifth of Galenika’s debt and cut in half the company’s 1,400-strong workforce, RTS said.
Galenika is currently stable and will have no problems in servicing its short-term debt. Therefore, the government has ordered the relevant authorities not to block the bank accounts of the company until March 31, 2017, the ministry said.
The British-Russian consortium has reportedly offered 7 million euro for the 25% shareholding interest. It was the only bidder left in the race after the bids submitted by India’s Cadila Pharmaceutical and Brazil’s EMS SA were rejected over procedural flaws.
The Serbian state controls 70% of Galenika directly and a further 15% via state-owned investment fund Akcionarski Fond Beograd. The remainder is controlled by retail shareholders.
